The Reserve Bank of India (RBI) on Wednesday made an important change in how banned 500- and 1,000-rupee notes can be deposited in banks after a backlash over a rule that required an explanation for deposits above Rs 5,000.
No questions will be asked for deposits above Rs 5,000 rupees “fully compliant” KYC or Know Your Customer accounts, the RBI said, two days after it said all such deposits would invite questions.
On Monday, the government had said that people can make just one deposit of more than Rs 5,000 in banned notes till December 30 and they will be questioned.
While announcing the rule, the government said it was presuming that in the five weeks since Prime Minister Narendra Modi announced the ban to check tax evasion, most people would have deposited their old notes.
But many complained that they had been advised by the government earlier not to rush to deposit the banned notes and they had till December 30 to do so.
Finance Minister Arun Jaitley later clarified that no questions will be asked if any amount of the banned currency is deposited in one go, but said repeated deposits may raise queries.
“If you have old currency, deposit it with banks at one go as repeat deposits of such notes raise doubts,” Mr Jaitley urged, explaining that there is no scope to do anything with the old notes since they cannot be used anymore.
The notes ban took out 86 per cent of the currency in circulation or 15.44 lakh crores. More than 13 lakh crores of that has been returned to banks and, experts say virtually all the money that was outlawed will be returned, which challenges the government’s claim that demonetisation would unearth about Rs 5 lakh crore in undeclared money.
